Huffington Capital Provides Details of Proposed Qualifying Transaction with Grapheneca

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VANCOUVER, British Columbia, Jan. 10, 2019 (GLOBE NEWSWIRE) — Huffington Capital Corp. (TSXV:HU.H) (“Huffington”), a “capital pool company” pursuant to the policies of the TSX Venture Exchange (the “TSXV”), is pleased to announce details of the transactions contemplated in its letter of intent dated September 7, 2018 (the “LOI”) with Nano Graphene Inc. dba Grapheneca (“Grapheneca”). Pursuant to the LOI, Huffington and Grapheneca will effect a transaction that will result in a reverse takeover of Huffington by the shareholders of Grapheneca (the “Transaction”) to ultimately form the resulting issuer (the “Resulting Issuer”). Upon completion of the Transaction, it is the intention of the parties that the Resulting Issuer will continue the business of Grapheneca. Pursuant to the terms of the LOI and subject to completion of certain conditions precedent, Huffington intends that the Transaction will qualify as its “Qualifying Transaction” as defined by Policy 2.4 of the TSXV.

About Grapheneca

A private Florida corporation incorporated on July 18, 2016, Grapheneca is a commercial scale graphite-, graphene- and other carbon-based materials producer and supply company headquartered in New York. Grapheneca has developed a production facility in New York and has commenced production of high quality un-oxidized nanosized pristine graphite and graphene flakes depending on customer and application requirement. Grapheneca also implements its own products to broad range of carbon-based composite materials for different commercial and industrial applications.

The technology underlying Grapheneca’s products provides an ecologically friendly cost-efficient way for nano-sized carbon materials that are free from physical defects, chemically pure, non-oxidized and have a high length-to-width aspect ratio. Grapheneca has filed a provisional application for patent with the United States Patent and Trademark Office (USPTO) and has passed the preliminary examination with the China State Intellectual Property Office (SIPO).

Grapheneca is ready for bulk products manufacturing with simultaneous implementation of these products in numerous industrial and commercial applications. In parallel, Grapheneca has developed independently, a wide range of carbon-based composite products for different commercial and industrial applications. Additionally, Grapheneca is also working with several industrial customers to develop multiple high-tech commercial products. Amongst such projects are battery production, supercapacitors, sensors, conductive inks, 3D printing, corrosion protective coatings and paints, scratch and impact resistance coatings, thermal management applications, water treatment and filtration, cement and mortar additives, electronics and microelectronics, polymer and rubber composites. For more information please visit Grapheneca’s website (www.graphene.ca).

There are currently over 25 shareholders of Grapheneca. It is anticipated that immediately following the Transaction, the only shareholders that will hold greater than 10% of the issued and outstanding shares of the Resulting Issuer (the “Resulting Issuer Shares”) will be High Technology Capital Fund LP, governed by the laws of Delaware and of which Dr. Boris Goldstein is a director (and he is also anticipated to be a director of the Resulting Issuer). It is anticipated that High Technology Capital Fund LP will own as much as approximately 30% of the Resulting Issuer Shares).

Based on the unaudited financial statements of Grapheneca for the year ended December 31, 2017, Grapheneca had total assets of approximately US$1.8 million, total liabilities of approximately US$2.1 million and a deficit of approximately US$0.3 million. As at September 30, 2018, Grapheneca’s unaudited interim financial statements indicate that Grapheneca had total assets of approximately US$2.8 million, total liabilities of approximately US$3.6 million, total deficit of approximately US$0.8 million. For the nine month period ended September 30, 2018, Grapheneca had no revenue and an operating loss of approximately US$1.2 million.

Details of the Proposed Transaction

Pursuant to the Transaction, Huffington and Grapheneca will combine their businesses. The Transaction will effectively provide for the acquisition of all the outstanding equity interests of Grapheneca by Huffington, indirectly through a wholly-owned subsidiary of Huffington (the “SubCo”), in a transaction in which the shareholders of Grapheneca will be issued Resulting Issuer Shares. It is anticipated that Grapheneca and SubCo will amalgamate (the “Amalgamation”), which amalgamated entity (the “Amalgamated Corporation”) will become a wholly-owned subsidiary of the Resulting Issuer.

As of the date hereof, there are 52,846,000 common shares of Grapheneca issued and outstanding (the “Grapheneca Shares”) and, other than stock options exercisable for up to 2,000,000 Grapheneca Shares, broker warrants exercisable for up to 455,630 Grapheneca Shares and convertible debentures (principal amount C$1.1 million) exercisable for up to 5,692,000 Grapheneca Shares, no other convertible securities outstanding. Subject to completion of a Concurrent Financing (as defined below), as part of the Transaction, it is anticipated that an aggregate of 60,000,000 Resulting Issuer, at a deemed value of C$0.30 per share, will be issued to the holders of Grapheneca Shares in exchange for all of the Grapheneca Shares issued and outstanding as at the effective date of the Transaction. In addition, all outstanding convertible securities of Grapheneca will be exchanged for convertible securities of the Resulting Issuer based on the same ratio Grapheneca Shares are exchanged for Resulting Issuer.

Prior to the Transaction, it is anticipated that Huffington will complete a private placement into Huffington (the “Huffington Financing”) for gross proceeds of a minimum of C$150,000, consisting of the issuance of 600,000 shares in the capital of Huffington at a price of C$0.25 per share.

Prior to or concurrently with the Transaction, Grapheneca proposes to complete a brokered private placement led by Leede Jones Gable Inc. (“LJG”) of subscription receipts (the “Subscription Receipts”) of a company to be incorporated under the laws of the Province of British Columbia (“Finco”), an entity to be wholly-owned by Boris Goldstein, the Chief Executive officer and founder of Grapheneca, at a price of C$0.30 per Subscription Receipt, for gross proceeds to Finco of a minimum of C$4,500,000 and a maximum of C$6,600,000 (the “Concurrent Financing”). Each Subscription Receipt will automatically convert into one common share of Finco (each, a “Finco Share”) on the satisfaction or waiver of all conditions precedent to the Transaction and certain other ancillary conditions (the “Release Conditions”) without any further consideration on the part of the subscriber.  It is anticipated that the Transaction will be structured to ensure that the holders of Finco Shares issued upon conversion of the Subscription Receipts will receive Resulting Issuer Shares in exchange therefor which are freely tradeable at the time of completion of the Transaction. In connection with the Concurrent Financing, Finco will pay LJG a cash commission equal to 8.0% of the gross proceeds of the Concurrent Financing, except in respect of funds raised by president’s list purchasers for which the cash commission will be limited to 2.0% of such funds, and, upon satisfaction of the Release Conditions, will issue to LJG non-transferable options to purchase that number of Finco Shares equal to 8.0% of the number of Subscription Receipts issued under the Concurrent Offering at a price of C$0.30 per share for a period of 24 months.

Upon completion of the Transaction, subject to approval of the TSXV, Hamsa Capital Inc. and Ansacha Capital Inc. (together, the “Finders”) will be entitled to an aggregate finder’s fee of 2,400,000 Resulting Issuer Shares, equal to 4.0% of the value (C$18,000,000) ascribed to Grapheneca.

Following the completion of the Transaction, the Resulting Issuer will be governed by the laws of the Province of British Columbia, and it is expected that approximately 79,575,000 Resulting Issuer Shares will be outstanding, and approximately 9,548,630 Resulting Issuer Shares will be reserved for issuance pursuant to convertible securities of the Resulting Issuer.

The current shareholders of Huffington, not including investors in the Huffington Financing, are expected to hold approximately 2.2% of the Resulting Issuer Shares, investors of the Huffington Financing are expected to hold approximately 0.8% of the Resulting Issuer Shares, the current shareholders of Grapheneca are expected to hold approximately 73.0% of the Resulting Issuer Shares, investors of the Concurrent Financing are expected to hold approximately 20.7% of the Resulting Issuer Shares (assuming the minimum offering of C$4,500,000), and the Finders are expected to hold approximately 3.3% of the Resulting Issuer Shares.

Closing of the Transaction remains subject to several conditions precedent, including execution of a definitive agreement, the preparation and filing of an Filing Statement, completion of the Concurrent Financing and the Huffington Financing, Huffington having no less than C$100,000 in shareholders’ equity (assets less liabilities) as at the time of closing of the Transaction, Huffington shareholders approving the change of the Resulting Issuer’s name as may be determined by Grapheneca, Grapheneca shareholders approving the Transaction, and obtaining TSXV approval for the Transaction.

The Transaction will not constitute a “Non-Arm’s Length Qualifying Transaction” (as such term is defined by the TSXV). In addition, the Transaction is not a “related party transaction” as such term is defined by Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions and is not subject to Policy 5.9 of the TSXV. As a result, no meeting of the shareholders of Huffington is required pursuant to Policy 2.4 of the TSXV or securities laws.

The Resulting Issuer

Immediately prior to the completion of the Transaction, the Resulting Issuer is expected to change its name to Grapheneca Holdings Inc., and the Resulting Issuer will be an Industrial/Technology/Life Sciences issuer under the policies of the TSXV.

Concurrent with the completion of the Transaction, all directors and officers of Huffington will resign and be replaced by nominees put forth by Grapheneca. The following individuals are expected to be appointed as new directors and/or officers of Grapheneca pursuant to the Transaction:

Dr.Boris Goldstein – Director and Chief Executive Officer

Dr. Boris Goldstein has 30 years of experience in cavitation technologies, hydrojet slotting technologies, oil sand technologies, medical sensors, digital, electronic exchanges and diagnostics. Dr. Goldstein is the founder of Grapheneca. Dr. Goldstein is also a founder and Chairman of Brain Scientific (BRSF), a publicly traded FDA approved medical device company through its subsidiary Memory MD, focused on EEG and brain scan and storage with AI capabilities. Dr. Goldstein is a serial entrepreneur, having founded or co-founded over a dozen private companies over the past 10 years alone. Since February 2014, he is the founder and Chairman of Potbotics Inc., a private data aggregation and technology company focused on the global medical cannabis market. Since April 2015, he is the founder, Chairman of the Board and president of Lendindex LLC, a private financial technology company providing innovative lending and credit scoring solutions for small businesses and investors. Since April 2015, he is the founder, Chairman of the Board and was the president of Art2Score Inc., a private, artificial intelligence commerce company. He is also the founder, Chairman of the Board and was the president of BDA Ventures LLC, a private company focused on machine intelligence and applications in various Fin-tech sectors. Other private companies founded or co-founded by Dr. Goldstein include BarterRoot, BrainBit, Callibri, Energy Price Index, High Data Technologies, The Native Inc., Nano Agro Group and OncoTrial. Dr. Goldstein is the founder in November 2016 and Managing Director of High Technology Capital Fund and High Technology Capital Management LLC, and is a partner in High Accelerator, which helps build and support next generation technologies. Dr. Goldstein moved from Latvia to Silicon Valley in 1991 to monitor the growth of Solby. While residing in California with his family members, Mr. Goldstein obtained his Ph.D. from the University of Latvia.

Mark Corrao – Chief Financial Officer

Mark Corrao has 35 years of accounting and finance experience. Mr. Corrao is the managing director of the CFO Squad, where he assists clients with corporate development. Mr. Corrao also provides oversight at the board level for both public and private companies. Mr. Corrao offers over thirty years of experience in the public accounting arena specializing in certified auditing, SEC accounting, corporate taxation and financial planning. Prior to joining the CFO Squad, Mr. Corrao was the Chief Financial Officer for Business Efficiency Experts (BEE), a Long Island consulting firm specializing in outsourced CFO services and SEC regulatory compliance services. Prior to working for BEE, Inc., Mr. Corrao served as the CFO and chief accounting officer for StrikeForce Technologies, Inc., a software company specializing in the prevention of identity theft and computer protection. His tenure in accounting included partner at a Connecticut CPA firm for several years and includes numerous years on Wall Street with prestigious firms such as Merrill Lynch, Spear Leeds & Kellogg and Greenfield Arbitrage Partners. Mr. Corrao has been involved in numerous IPOs, and several startup companies.

Irina Migalina – Director

Irina Migalina, has been working in the area of banking and finances for more than 20 years.  Ms. Migalina has provided Grapheneca strategic analysis in areas of finances, operations and business management since 2017. Prior to joining Grapheneca, Ms. Migalina was Chief Financial Officer of Grostex, LLC from 2002 to 2005, Chief Executive Officer of Bastion Group, LLC from 2005 to 2009, and a Financial Adviser at Europack Group from 2005 to 2017.

George Anastassov – Director

Dr. George E. Anastassov has been the Chief Executive Officer of AXIM Biotechnologies, Inc. since May 2014. Prior to that Dr. Anastassov was one of the founders and the Chief Executive Officer of CanChew Biotechnologies, LLC since April 2011. Dr. Anastassov is also one of the founders and a Board Member and a general partner of Sanammad Foundation and Sanammad Pharmaceuticals; both companies originated and located in the Netherlands since 2009 and 2014, respectively. He is one of the developers of the first-in-the-world cannabinoid-containing chewing gum-based delivery systems. Dr. Anastassov possesses Medical and Dental Doctorates from New York University and Medical Academy in Sofia, Bulgaria as well as an Executive MBA from The University of Tennessee. Dr. Anastassov has been recognized in the United States’ “Who’s Who in Medicine” as well as the United States’ “Who’s Who in Business Professionals” numerous times. He is the recipient of multiple national and international professional and humanitarian awards.

Robbie Grossman – Corporate Secretary

Mr. Grossman, an experienced corporate finance, M&A and securities partner, has been with DLA Piper (Canada) LLP since February 2018, and previously was at McMillan LLP from September 2013 to February 2018 and at Garfinkle Biderman LLP from February 2004 to September 2013. Mr. Grossman has been, and currently is, an officer and director of several publicly traded companies. Mr. Grossman holds a LL.B. from the University of Windsor and a B.A. (Political Science) from Concordia University, and he was called to the Ontario bar in 2002.

Other independent directors of the Resulting Issuer are still being identified.

Sponsorship

Sponsorship of a Qualifying Transaction of a capital pool company is required by the TSXV unless exempt in accordance with TSXV policies. Huffington intends on applying for an exemption from the sponsorship requirements under subsection 3.4(a)(ii) of Policy 2.2 of the TSXV Corporate Finance Manual, however, there is no assurance that Huffington will ultimately obtain this exemption.

About Huffington

Huffington’s principal business activity is to identify and evaluate opportunities for acquisition of assets or business. Huffington was incorporated pursuant to the provisions of the Business Corporations Act (British Columbia) on July 21, 2015.

Additional Information

All information contained in this press release with respect to Huffington and Grapheneca was supplied, for inclusion herein, by the respective parties and each party and its directors and officers have relied on the other party for any information concerning the other party.

Contact Information

For more information please contact:

Steve Bajic
Chief Executive Officer and Director
Huffington Capital Corp.
Tel: (604) 288-8906
Email: steve@orangecapital.ca
Peter Nesveda
VP International Corporate Affairs and Investor Relations
Grapheneca
Tel: +61 412 357 375
Email: pnesveda@graphene.ca

Forward-Looking Information

Although Huffington believes, in light of the experience of its officers and directors, current conditions and expected future developments and other factors that have been considered appropriate that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be   placed on them because Huffington can give no assurance that they will prove to be correct. When used in this press release, the words “estimate”, “project”, “belief”, “anticipate”, “intend”, “expect”, “plan”, “predict”, “may” or “should” and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information. The forward-looking statements and information in this press release include information relating to the business plans of Huffington and Grapheneca, the Transaction (including receipt of TSXV approval, and the closing of the Transaction and timing thereof), the board of directors and management of the Resulting Issuer and the business to be conducted by the Resulting Issuer upon completion of the Transaction, the number of Resulting Issuer Shares to be issued in connection with the Transaction and the relative ownership thereof, and the Concurrent Financing and the Huffington Financing and the use of proceeds therefrom. Such statements and information reflect the current view of Huffington and/or Grapheneca, respectively. Risks and uncertainties that may cause actual results to differ materially from those contemplated in those forward-looking statements and information.

By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following risks: (i) there is no assurance that Huffington and Grapheneca will obtain all requisite approvals for the Transaction, including the approval of the TSXV for the Transaction (which may be conditional upon amendments to the terms of the Transaction); (ii) there is no assurance that the Concurrent Financing will be completed as contemplated or at all; (iii) there is no assurance that the Huffington Financing will be completed as contemplated or at all; (iv) following completion of the Transaction, the Resulting Issuer may require additional financing from time to time in order to continue its operations and financing may not be available when needed or on terms and conditions acceptable to the Resulting Issuer; (v) new laws or regulations could adversely affect the Resulting Issuer’s business and results of operations; and (vi) the stock markets have experienced volatility that often has been unrelated to the performance of companies. These fluctuations may adversely affect the price of the Resulting Issuer’s securities, regardless of its operating performance. There are a number of important factors that could cause Huffington’s and Grapheneca’s actual results to differ materially from those indicated or implied by forward-looking statements and information. Such factors include, among others: currency fluctuations; limited business history of Huffington; disruptions or changes in the credit or security markets; results of operation activities and development of projects; project cost overruns or unanticipated costs and expenses, and general market and industry conditions. The terms and conditions of the Qualifying Transaction may be based on Huffington’s due diligence and the receipt of tax, corporate and securities law advice for both Huffington and Grapheneca. Huffington undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of Huffington, Grapheneca, their securities, or their respective financial or operating results (as applicable).

Huffington cautions that the foregoing list of material factors is not exhaustive. When relying on Huffington’s forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Huffington has assumed that the material factors referred to in the previous paragraph will not cause such forward-looking statements and information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors. The forward-looking information contained in this press release represents the expectations of Huffington as of the date of this press release and, accordingly, is subject to change after such date. Readers should not place undue importance on forward-looking information and should not rely upon this information as of any other date. Huffington does not undertake to update this information at any particular time except as required in accordance with applicable laws.

Completion of the proposed Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable pursuant to TSXV requirements, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

The certain financial data contained herein is unaudited and may be subject to refinement or modification during the audit process. Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information release or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSXV has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Neither TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

The securities referred to in this news release have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from the U.S. registration requirements. This news release does not constitute an offer for sale of securities for sale, nor a solicitation for offers to buy any securities. Any public offering of securities in the United States must be made by means of a prospectus containing detailed information about the company and management, as well as financial statements.

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